If that's the case, they, the PSC, are not aware of it! Because I called them first, and they sure had no clue in the world what I was talking about. And the sweetheart of a receptionist I spoke with worked her tail off to no avail, trying to locate someone who DOES have a clue. She finally resolved to send me a complaint form to fill out. I agreed to receive it for a reason I'll discuss further on.
She also told me that she was informed that it was more likely the PA Department of Banking that would be involved in the restriction. This coincided with Rep. Pallone's response in regards to the two regulations "cited as reasons for Prosper.com to discontinue accepting lender registrations" and accepting new bids from existing lenders.
So I gave the PA DOB a call.
They too had no clue what I was talking about. For some reason I was not surprised. So I did my best to explain the situation. At which point I was told that they discourage any type of involvement in Pay Day Loans. Pay Day Loans?
So I s-l-o-w-l-y and thoroughly explained the situation again, and provided a quick 101 on Prosper and P2P Lending. I also did my best to explain how the restriction impacts Lenders' investment:
- We can't liquidate,
- We can't compound our earnings, and
- We can't grow our portfolio thus,
- We can't narrow the risk impact of any single loan (ie. is a single loan worth 10% of your portfolio, or is worth 1% of your portfolio?)
After a couple of transfers I was given to someone who requested that I send, in writing, an explanation of the situation, and that I would receive a follow up from there.
So, I am now in the process of composing a letter.
I plan on including some pertinent documentation, especially the Prosper Lender Agreement that clearly explains that "Lenders" on Prosper are not "making", or "providing" loans:
"Your role as a Prosper "Lender" is that of a loan purchaser, and your rights and obligations as a purchaser or prospective purchaser of loans originated in the Prosper marketplace are set forth below.
Although you are referred to in this Agreement and on the Prosper website as a "Lender," you are not actually lending your money directly to Prosper borrowers, but are, instead, making loan purchase commitments and purchasing promissory notes from Prosper, representing loans made by WebBank, a Utah-chartered Industrial Bank ("WebBank") to borrowers and subsequently assigned to Prosper. All loans originated through Prosper are made to borrowers by WebBank from its own funds, and then subsequently sold and assigned by WebBank to Prosper. Prosper, in turn, will sell and assign such loans to the winning bidder or bidders on the listing without recourse to Prosper. WebBank is the originating lender and all loans are made under its charter as a Utah Industrial Bank. Prosper uses the term "Lender" instead of "loan purchaser" for the sake of brevity and simplicity.
This Lender Registration Agreement is made and entered into between you and Prosper Marketplace, Inc. ("Prosper")."
I will be sure to post the letter I draft along with a list of any enclosures.
I would really like to include a copy of the petition, and I most likely will, but honestly, and despite the incredible value of every signature added so far, I think it's a little skimpy at this point to make much of an impact. So please, if you haven't signed yet please do so. If you have signed, then please email at least one of your pals asking them to sign.
I will be back with another post shortly on why I may file a complaint with the Securities Commission.
Please sign the petition!
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